Use the Following to Answer Question(s): Production Possibilities Schedule for Two

question 131

Multiple Choice

Use the following to answer question(s) : Production Possibilities Schedule for Two Commodities

-(Exhibit: Production Possibilities Schedule for Two Commodities) Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of units of commodity X each country would have to forgo to produce the additional units of commodity Y indicated.Further assume that the only input is labor and that it remains fully employed.We see from the table that Canada:

• A) has an absolute advantage in the production of both goods and a comparative advantage in the production of commodity X.
• B) has an absolute advantage in the production of both goods and a comparative advantage in the production of commodity Y.
• C) does not have an absolute advantage in the production of either good, but it has a comparative advantage in the production of commodity X.
• D) does not have an absolute advantage in the production of either good, but it has a comparative advantage in the production of commodity Y.

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